Fiona’s insurance claims could reach $700 million, says financial agency

Although property damage estimates from Hurricane Fiona are just beginning, Maritimers are looking to the future to determine how they can afford to pay for their losses, and many insurance companies don’t cover storm surges.

DBRS Morningstar, a financial services company, said Hurricane Fiona will cost between $300 million and $700 million due to insured losses.

“This would be significant but not significant enough to affect the financial strength of the large, nationally diversified insurance groups that are the major players in the property insurance market in Atlantic Canada,” DBRS Morningstar said in a report. of September 27.

Amanda Dean, vice president of the Atlantic region for the Insurance Bureau of Canada, said home insurance typically only covers certain types of water damage and usually requires a top-up flood policy. And even with supplemental policies, they usually don’t cover storm surge because it’s hard to gauge the risk with sea level rise and coastal erosion, she said.

The Co-operators Group Limited is an insurance company that provided storm surge coverage to residents of Atlantic Canada and British Columbia.

“To our knowledge, The Co-operators is the only Canadian insurer that offers storm surge protection,” company vice-president George Hardy said in a statement.

According to DBRS Morningstar, storm damage in Atlantic Canada is generally not a significant source of insured losses due to the absence of large population centers, lower property values ​​and relatively stable weather conditions. Together, the four Atlantic provinces represent only 5.9% of the total Canadian property insurance market.

“Data from the Insurance Bureau of Canada (IBC) shows that storms in Eastern Canada contributed $152 million and $50 million to catastrophe losses in two separate claims in 2021. This remains low compared to, for example, the hailstorm in Alberta ($500 million of insured losses) or the floods in British Columbia ($515 million of insured losses). Going back to 1983, no severe weather event in Atlantic Canada has ever contributed significantly to one of the 10 highest loss years on record,” DBS Morningstar reported.

Dean said the insurance industry wants to “create a national public-private overland flood insurance program that provides protection for all Canadians.”

A recent IBC report published on August 30 states: “If established, this [public-private] could help close the insurance protection gap for the approximately 800,000 homeowners in Canada whose homes are at such high risk of flooding that private insurance is either unavailable or unaffordable.

“Over the past 15 years, weather-related insurance claims have more than quadrupled. The new standard for insured catastrophic losses in Canada has reached $2 billion per year, with water-related damage responsible for most of the losses,” the report states.

Government assistance programs

Disaster Financial Assistance Arrangements is a federal program that provides financial assistance to provinces to help pay for expenses related to natural disasters, including the loss of individual property. The program provides financial assistance to provincial governments, not to residents themselves.

Residents of Prince Edward Island have an online self-assessment tool to determine their eligibility for the Provincial Disaster Financial Assistance Program (PDFAP).

“The extent of the damage caused by Fiona has been devastating and some things are not covered by our insurance policies,” Justice and Public Safety Minister Darlene Compton said. “That’s why we have the PDFAP. From our past experiences and those of our sister provinces in the Atlantic, we know that this program can help cover some of the uninsurable property repair costs for our residents.

The Nova Scotia government said in a Sept. 26 news release that for each household, business or nonprofit, it would cover up to $200,000 in uninsured losses.

“The Disaster Financial Assistance program provides assistance for eligible damages and losses that threaten the health and safety of individuals, municipalities and small businesses,” the statement said. “The program does not replace insurance. This will help cover only the basic costs of essential items.

The Newfoundland and Labrador government said the damage costs could be covered by its provincial assistance program with help from the federal government.

“The province will need to provide dates and estimated expenditures to the federal government, as well as meet the $1.7 million threshold. Coordination with residents and communities regarding disaster financial assistance is ongoing as we assess the impacts,” they said in a press release.

In addition to helping repair property damage, the federal government announced that for the next 30 days it will match donations made to the Red Cross to help those in need of temporary housing, clothing, food and other essential supplies.

The Canadian Press contributed to this report.

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Geraldine L. Melton